Have a large property that you are sure could be upgraded to great wealth, but have no idea how to develop it? Are you close to retirement and want to move to a smaller property but get the most value out of your existing property? Property Developing could be the answer you are looking for …
As in all projects that are undertaken in life, there is a system for everything. Real estate promotion is the same. There are seven key steps to property development:
The critical steps are:
Find a site (if you are not currently sitting at one)
Analysis site
Feasibility
Work license
Finance
Building
Dirty
Finding a site is easy enough, just look in the real estate section of the newspaper. Look on real estate websites. You are looking for a property that can be divided or that can be built more than what is currently on the property; or added value.
If you already own land that you feel could be developed to create much more value for you; no need to find a site.
Site and feasibility analysis is the step that can be critical for a project. Basically, it requires researching a site to see if it is profitable. Property development can have hidden costs. To find out what costs are required, it is a good idea to call the professionals to find out the costs. Call your local council for all costs required to connect / upgrade all utilities for your project. Architects are an excellent source for determining costs, such as council approval costs, including required drawing. Construction cost can be very important as many projects where new buildings will be constructed, construction costs are a large part of a project. The last important piece of information is the selling price because if you can’t sell your product long enough (or it stays on the market for a long time), the project will not be unviable.
Planning permission can sometimes already be done for you if your property is advertised as having approval, you will not need it. If you own a property that does not have this, you will need professional help. Architects can be invaluable here or someone who is a property developer or property development company offering project management can help. Using a professional can eliminate pain and stress, making for a much better experience.
Finances are one of the most fun topics to discuss. As we all know, talking to banks can be difficult to find financing for homes. And the same, if not more difficult, for projects and a good financial package is required, as all banks will have requirements, including profit margin. Banks will not make loans for projects with a profit margin of less than 20%.
Construction can be one of the most exciting and terrifying steps. Obviously most people will not do the construction themselves, it will be done by a builder. Construction is pretty simple when you have a building approval that allows the builder to start building. By paying for construction as it continues through the project, the builder will require funds for completed work. Paying the builder can get a bit tricky because obviously if you end up paying for the build before it’s complete, the project could fall apart. Have a contract in place, the contract will list all the necessary steps and the funds can be distributed to the builder in the development stages. You can pay a professional to oversee these steps so the builder is honest at all times.
If you are concerned about a large project, hire a quantity surveyor to follow the project. They will report on what has been completed and what is due. Surveyors are professionals at this and eliminate the risk of construction. Another advantage is that if you have a quantity surveyor, you can also have him create a depreciation schedule to aid sales.
Sales are an interesting topic. We all know that you can use a real estate agent to sell products. This can be very helpful as these people are professionals in the property sales business. Another option is to go to a promoter (or marketer) who will actually sell the product for you to a list of clients that you have (database of clients looking for investments). This may cost more, but if you need pre-sales it can be extremely helpful for quick sales.
If you have a property and would like to turn it into something much more or know someone who needs it. However, if you’re still not sure who is the first person to contact to get started.